Investing.com — Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD) stock fell 4% in pre-market trading Tuesday after reports that Meta Platforms (NASDAQ:META) is in discussions to spend billions on Google’s AI chips, potentially threatening the dominance of traditional GPU suppliers in the AI hardware market.
According to The Information, Google (NASDAQ:GOOGL) has begun pitching customers, including Meta and major financial institutions, on using its Tensor Processing Units (TPUs) in their data centers. Meta, which currently relies heavily on Nvidia’s graphics processing units, is reportedly considering a multi-billion dollar investment in Google’s TPUs for implementation in its data centers by 2027, as well as renting Google chips from Google Cloud as early as next year.
The potential shift in Meta’s AI hardware strategy sent ripples through the semiconductor sector. SoftBank Group shares tumbled 10% on concerns that Google’s Gemini AI model could increase competition for OpenAI, a key SoftBank investment. Both Nvidia and AMD have existing partnerships with OpenAI.
While Nvidia and AMD shares declined, Google and its TPU partner Broadcom (NASDAQ:AVGO) both traded higher in pre-market activity, extending recent gains as investors reassessed competitive positioning in the AI chip market.
The market reaction highlights growing competition in the AI chip space, where Nvidia has maintained a commanding lead but now faces challenges from both traditional rivals and new entrants developing specialized AI processing hardware.
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